Jean-Marie Eveillard Lecture: Lessons From Peter Bernstein

Jean-Marie Eveillard

Adviser, First Eagle Investment Management

March 13, 2014

Quotes

“We don’t look at gold as a commodity, but as a form of insurance against what Peter Bernstein calls extreme outcomes. In most circumstances in which worldwide equity markets would go down – and not just for a week or two – the price of gold would go up, providing a partial offset to the hits we’d take in our equity portfolio”.

“In general, there aren’t many countries in which we wouldn’t invest. But if a country is too economically or politically prevail, we pass. The main country in which we won’t invest today is Russia. There’s still too much risk for foreign (or even local) investors that you’ll think you own an asset and then Mr. Putin decides you don’t”.

“The knock on diversified funds is that they’re index-huggers, which given the geographic breadth of where we invest, is not at all the case for us. I know the argument that you should only own your best 30 or 40 ideas, but I’ve never proven over time that I actually know in advance what those are”.

“Our cash balance is purely a residual of whether or not we’re finding enough to invest in”.

“If one is wrong in judging a company to have a sustainable competitive advantage, the investment results can be disastrous”.

“Top executives from a Japanese property company and casualty insurer we’ve owned for years just in our office last month explaining the extent of the CDO exposure in their investment portfolio, which was upsetting to us. We said,”Didn’t the fact that you were buying a triple-A rated product with a yield much in excess of what you could get from The Procter & Gamble Company (NYSE:PG) sound too good to be true?”. But that kind of thing happened around the world.